in monopolistic competion there is perfect knowledge among buyers and seller acc to my boopk so which is the correct one in monopolistic firms ? there is perfect or imperfect knowledge?
In case of monopolistic competition, there exists imperfect knowledge on part of both the buyers as well as the sellers. That is, both the buyers and the sellers do not have complete information regarding the market conditions. The preferences of the buyers are significantly influenced by heavy advertisement. As there exist product differentiation they are not able to acquire complete knowledge regarding the availabilty of different products and their specifications. Similarly, the sellers do not have complete information regarding the preferences of the products of the competitors.